DAR ES SALAAM: LAST week I wrote an article questioning whether Africa’s global rating offers an honest assessment or reflects a modern blind spot in economic control.
I argued that, for decades, African nations have relied heavily on international credit rating agencies such as Moody’s, Standard & Poor’s (S&P), and Fitch Ratings to gauge their creditworthiness in global financial markets.
This assessment can now be carried out by agencies within African institutions, despite its original purpose of verifying repayment ability or qualification for development loans. This shift is driven by technological progress and improvements in African countries’ capacity, transparency, and governance.
Since ratings from these Western-led agencies affect how much African governments pay when borrowing, influence foreign investors’ willingness to invest, and shape the global perception of economic risk in Africa, I believe that many African policymakers, economists, and development finance specialists are increasingly asserting that the current rating system often does not accurately reflect Africa’s real economic conditions and growth potential.
Much as I might be seen as venturing into untouched territory with a vested interest, the debate is no longer about whether Africa needs its own credible rating mechanisms.
The real question is this: My plea to African central bank governors is to rethink, and to the ministers for finance to think critically, about how African nations can establish credit rating institutions that are globally respected, trusted by investors, and capable of competing with established international agencies, while maintaining the highest standards of independence and professionalism.
This is essential. Drawing on many training sessions from these agencies, awards of excellence, and over a decade of working for a publicly owned DFI in Tanzania, I confidently assert that overreliance on foreign rating agencies is problematic.
Credit ratings are essential in global finance, as a single downgrade can significantly increase borrowing costs by hundreds of millions and discourage investment. Several African countries have raised concerns that international agencies often employ methodologies that do not adequately account for Africas specific factors, including structural reforms, natural resource wealth, demographic advantages, and long-term growth prospects.
Many of you would agree with me that African economies are often collectively classified as high-risk, even though they vary greatly in economic structures, governance, and development paths. Consequently, some nations might face higher interest rates than their risk profiles would warrant.
Whether these concerns are fully justified or not, perceptions matter. If African countries believe they are being systematically misunderstood, then creating credible alternatives becomes an important component of financial sovereignty for their future.
However, caution is advised because replacing trust is challenging. Moody’s, S&P, and Fitch have over a century of developing reputations, methodologies, databases, and investor confidence. Therefore, any African alternative should prioritise establishing credibility before competing. What I mean is that independence must be non-negotiable.
The greatest challenge facing any African credit rating initiative is establishing independence from political influence. Investors will not trust ratings that appear to be controlled by governments seeking favourable assessments. A rating agency that routinely assigns high ratings to weak economies will quickly lose credibility in global markets.
African rating agencies should be legally protected from political interference. Their governance should feature independent boards made up of respected economists, statisticians, risk specialists, academics, pension fund managers, and financial market professionals. Currently, Africa has promising candidates on this path.
Funding models should avoid excessive dependence on a single government. A diverse shareholder base comprising stock exchanges, pension funds, development banks, sovereign wealth funds, universities, and private investors would enhance confidence in the institution’s objectivity. The core principle of credibility is straightforward: Ratings must be based on evidence, even when the findings are inconvenient.
Africa must strengthen data quality to support credible credit ratings. Challenges in statistical consistency, debt reporting, measurement of the informal sector, and economic monitoring must be addressed. The African Union, AfDB, central banks, and statistical offices should establish a continent-wide database to standardise key financial, economic, governance, climate, and banking data.
Reliable data forms the foundation of decision-making in finance, where trust and long-term investments rely on accurate information. Africa will advocate for adopting global standards rather than relying on African exceptions.
Creating rating methodologies that diverge greatly from established international risk assessment frameworks would be a mistake. Investors value comparability and aim to evaluate countries such as Tanzania and Vietnam, Kenya and Indonesia, or Ghana and Colombia using common metrics.
African rating agencies should adopt internationally recognised standards while incorporating additional African-specific variables that improve accuracy without replacing existing frameworks.
These could include regional integration benefits, progress in infrastructure development, demographic dividend potential, natural capital valuation, climate resilience investments, and informal economy productivity. The aim is to achieve more accurate ratings, not necessarily more favourable ones. Building world-class technical capacity is crucial.
The continent already possesses significant talent. The challenge is creating institutions capable of attracting and retaining top professionals who might otherwise work in London, New York, Frankfurt, Dubai or Singapore. Talent is a critical ingredient in building credibility.
There will be a need to create strong regulatory oversight. Trust requires accountability. African credit rating agencies should be supervised by independent regulatory bodies operating under transparent legal frameworks. Their methodologies, assumptions, and rating processes should be publicly available for scrutiny.
African credit rating agencies will gain global respect through proven accuracy, not marketing campaigns. Investors value ratings that consistently predict risk and economic performance. Building such credibility requires a strong track record developed over many years. Trust cannot be bought or promoted; it must be earned through reliable, evidence-based assessments.
Strengthen domestic capital markets. A credible rating ecosystem cannot operate in isolation. African governments should continue to develop bond markets, pension funds, insurance sectors, stock exchanges, and asset management industries. As domestic capital markets expand, demand for highquality ratings will increase naturally.
A robust local investor base provides an important testing ground for African rating agencies to establish their reputations before expanding their influence internationally. Countries such as South Africa, Kenya, Morocco, Egypt, Nigeria and Tanzania can play leading roles in developing regional rating ecosystems that support the expansion of financial markets.
Africa should consider creating a continental sovereign risk observatory to independently research economic vulnerabilities and opportunities. This institution could monitor debt sustainability, analyse fiscal risks, evaluate climate-related financial risks, identify infrastructure financing gaps, and track governance progress.
By establishing a strong, responsible rating agency that adheres to international laws and standards, African nations can access borrowing opportunities both domestically and internationally, provided they are open to reviews free from political bias.